Fraud is one of the most popular methods now used to fund the activities of terrorists. But the connection between fraud and terrorism financing in the UK has been overlooked by successive governments, despite an acknowledgement of that link. Worryingly, the UK government’s new fraud and counter-terrorism strategies offer no policies to tackle the problem.
Until the terrorist attacks in the US in September 2001, the international community had focused its financial crime efforts on tackling money laundering. As a result of 9/11, governments instigated a ‘financial war’ on terrorism which has limited the sources available to terrorist groups. Now similar work is needed to tackle the acts of terror funded through fraud.
Terrorism financing dossier
My research focuses on the numerous terrorist attacks which have been financed by fraud. This work has identified a terrorism financing dossier, which includes passport fraud, immigration fraud, identify theft, financial fraud, and tax fraud.
Benefit fraud is one of the most common methods used to fund terrorism in Europe, especially in Belgium, Scandinavia, and the UK. Credit card, personal loan, and bank fraud is prevalent in terrorism networks in the US and the UK. And not-for-profit organisation fraud and tax fraud are also prevalent in the US, UK, and Spain.
The UK government has introduced a series of measures to try to tackle these issues. These include the Economic Crime (Transparency and Enforcement) Act 2022 and the economic crime and corporate transparency bill (2022), which is still going through parliament. Both are intended to extend the UK’s sanctions regime and improve the use of unexplained wealth orders (which allow for the confiscation of property without proving criminality).
However, there are no specific measures to tackle the association between fraud and the financing of terrorism. This means there are still a number of loopholes that terrorists could exploit. And organisations are under no obligation to report fraud to the security services. But terrorists have used fraud to help finance attacks in the UK over the past two decades.
UK terror attacks
In July 2005, four suicide bombers killed 52 people and injured more than 770 others after detonating four improvised explosive devices in London. The financing of this terrorist attack and its association with fraud stretch back to 1995. That is when HMRC connected several suspected frauds with Shehzad Tanweer, one of the terrorists. Yet this information was not disclosed to either the UK’s Financial Intelligence Unit or the security and intelligence services by HMRC.
In May 2017, Salman Abedi detonated an improvised explosive device in the Manchester Arena, killing 22 people and injuring more than 800 others. Abedi had fraudulently used student loans and his maintenance grant to fund the attack. He received £7,000 from the Student Loans Company after securing a place at university in October 2015. Higher education institutions are under no legal obligation to report any suspicions of fraud or terrorism financing to the National Crime Agency (NCA).
In June 2017, Khuram Butt, Rachid Redouane, and Youssef Zaghba used a van to knock down several pedestrians on London Bridge before continuing their terrorist attack on foot. In total, eight people were killed and 48 others were injured. Butt had been investigated and arrested by Scotland Yard on suspicion of falsely reporting fraudulent activity on three separate bank accounts in October 2016. After his arrest, Butt was granted bail and the fraud charges were eventually dropped due to insufficient evidence. But the banks had been under no legal obligation to submit a report to the NCA.
A disruptive mechanism
What these examples demonstrate is that the current reporting obligations are unable to prevent such terrorism financing threats. In light of these cases, the reporting of fraud should become mandatory for organisations. It would place fraud on the same legislative footing as money laundering, for example, which is already recognised as an important source of terror finance.
The UK government also needs to reconsider its current fraud and counter terrorism strategies. They should include measures that focus on using fraud investigation as a disruptive mechanism to prevent future acts of terrorism.
Nicholas Ryder, Professor of Law, Cardiff University. This article is republished from The Conversation under a Creative Commons license. Read the original article.
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